The Board of Trustees, in Their Capacities As Trustees of the Laborers Health and Welfare Trust Fund For Nothern California et al v. Pacific Coast Markings, Inc.

Northern District of California, cand-4:2014-cv-02979

REPORT AND RECOMMENDATIONS re {{25}} MOTION for Default Judgment by the Court filed by The Board of Trustees, in their capacities as Trustees of the Laborers Health and Welfare Trust Fund for Nothern California, Laborers Pension Trust Fund f or Northern California, Laborers Training and Retraining Trust Fund for Northern California, Laborers Vacation-Holiday Trust Fund for Northern California Objections due no later than fourteen days after party is served with a copy of this report. Signed by Judge Joseph C. Spero on March 23, 2015. (jcslc3S, COURT STAFF)

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0 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 THE BOARD OF TRUSTEES, IN THEIR 7 CAPACITIES AS TRUSTEES OF THE Case No. 14-cv-02979-PJH (JCS) LABORERS HEALTH AND WELFARE 8 TRUST FUND FOR NORTHERN CALIFORNIA, et al., REPORT AND RECOMMENDATION 9 REGARDING MOTION FOR DEFAULT Plaintiffs, JUDGMENT 10 v. Re: Dkt. No. 25 11 PACIFIC COAST MARKINGS, INC., et al., 12 Northern District of California United States District Court Defendants. 13 14 I. INTRODUCTION 15 In this ERISA enforcement action, Plaintiffs move for entry of default judgment and an 16 order awarding unpaid employee benefit contributions, liquidated damages and interest, and 17 attorneys' fees and costs. Plaintiffs' Motion was referred to the undersigned magistrate judge for a 18 report and recommendation. The Motion came on for hearing on February 13, 2015. Plaintiffs 19 filed a supplemental declaration on March 6, 2015 and a second supplemental declaration on 20 March 19, 2015. For the reasons stated below, it is RECOMMENDED that the Motion be 21 GRANTED. 22 II. BACKGROUND 23 A. Facts 24 The First Amended Complaint ("FAC") names the following trust funds ("Trust Funds") 25 as Plaintiffs: (1) Laborers Health and Welfare Trust Fund for Northern California; (2) Laborers 26 Vacation-Holiday Trust Fund for Northern California; (3) Laborers Pension Trust Fund for 27 Northern California; (4) Laborers Training and Retraining Trust Fund for Northern California. 28 FAC at 2. The FAC alleges that the Trust Funds are employee benefit plans within the meaning of 0 1 sections 3, 4, and 502 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 2 1002, 1003, and 1132. Id. 3 The FAC names (1) Mark Thomas Bates, individually; (2) Mark Thomas Bates, doing 4 business as Pacific Coast Markings, Inc., a suspended California corporation; and (3) Pacific 5 Coast Markings, Inc., a suspended California corporation as Defendants. Id. The declaration of 6 Michelle Lauziere1 states that Bates is an officer of Pacific Coast Markings, Inc. (signing as 7 "President"). Declaration of Michelle Lauziere in Support of Motion for Default Judgment 8 ("Lauziere Decl.") ¶ 7. Plaintiffs allege that "at all times material herein," Defendants "have been 9 an employer within the meaning of section 3(5) and section 515 of ERISA (29 U.S.C. §§ 1002(5), 10 1145)." FAC at 2–3. The FAC alleges that by signing a Memorandum Agreement with the 11 Northern California District Council of Laborers, "Defendants were signatories and bound to" the 12 Northern California Laborers Master Agreement ("Master Agreement") and Trust Agreements that Northern District of California United States District Court 13 govern each of the Trust Funds. Id. at 3. 14 The Master Agreement establishes the rates at which employers are required to contribute 15 to the Trust Funds. Lauziere Decl. ¶¶ 9–10, Ex. F (Master Agreement) at 28. Employers must 16 make payments no later than the 25th day of the month; if payments are not made by that date, 17 they become delinquent. Lauziere Decl., Ex. A (Trust Agreements) at 6 (Art. II, § 10). The Master 18 Agreement provides for liquidated damages and interest on delinquent contributions. In particular: 19 All delinquent contributions shall bear simple interest at the rate of one and one-half percent (1.5%) per month until receipt of payment. 20 Subject to accounting verification, liquidated damages shall be assessed on delinquent contributions at a flat rate of one hundred 21 and fifty dollars ($150.00) per month to reflect the internal administrative costs incurred by the trust administrators in 22 monitoring and tracking such late contributions. 23 Lauziere Decl., Ex. F, § 28A.2 24 In the FAC, Plaintiffs allege that for a number of months between 2011 and 2013, 25 1 26 Accounts Receivable Manager for Laborers Funds Administrative Office of Northern California, Inc. 2 27 At oral argument, Plaintiffs stipulated that the $150 in liquidated damages referenced in Section 28A does not accrue every month after the contribution becomes delinquent and remains unpaid, 28 as the language of that provision might suggest, but rather, is a one-time fee that is imposed for each month in which contributions are not paid on time. 2 0 1 Defendants either failed to pay their required contributions or failed to pay them on time. FAC at 2 4. Plaintiffs assert the following claims: (1) breach of contract; (2) actual damages for breach of 3 contract; and (3) damages and equitable relief for breach of fiduciary duty, which Plaintiffs allege 4 constitutes a violation of ERISA, 29 U.S.C. § 1145. Id. at 4-6. 5 B. Service and Entry of Default 6 On September 21, 2014, Plaintiffs served Defendants with the summons and First 7 Amended Complaint by personally delivering the papers to Bates. See Dkt. Nos. 19 and 19-1 8 (Proofs of Service Summons). Plaintiffs state that Bates is an officer of Pacific Coast Markings, 9 Inc. Lauziere Decl. ¶ 6, Ex. G (Memorandum of Agreement Signed by Mark Bates as Responsible 10 Official for Pacific Coast Markings, Inc.). Defendants did not answer. On November 10, 2014, 11 Plaintiffs filed a Request for Entry of Default. Dkt. 23. On November 13, 2014, the Clerk entered 12 default against Defendants. Dkt. 24. On December 18, 2014, Plaintiffs filed the instant Motion Northern District of California United States District Court 13 seeking entry of default judgment. 14 C. Motion 15 In the Motion, Plaintiffs request default judgment against Defendants and awards of: (1) 16 $9,767.26 in unpaid contributions for June through September 2013; (2) $4,599.56 in liquidated 17 damages and interest for May and June of 2011, August through October of 2011, August 2012, 18 June through September of 2013, November and December of 2013, and August through October 19 of 2014; (3) $10,857.50 in attorney's fees and $876.51 in costs. Mot. at 4–5; Lauziere Decl. ¶¶ 14– 20 15. 21 D. Supplemental Declarations 22 After the hearing, Plaintiffs filed two supplemental declarations. See Supplemental 23 Declaration of Michelle Lauziere in Support of Plaintiffs' Motion for Default Judgment ("Lauziere 24 Supp. Decl."); Second Supplemental Declaration of Michelle Lauziere in Support of Plaintiffs' 25 Motion for Summary Judgment ("Lauziere Second Supp. Decl."). The supplemental declarations 26 include the interest calculations (original amount due and dates of late payments) on late 27 contributions for the following months: May and June of 2011, August through October of 2011, 28 August 2012, June through September of 2013, November and December of 2013, and August 3 0 1 through October of 2014. See Lauziere Supp. Decl., Exs. B–D and F–K; Lauziere Second Supp. 2 Decl. ¶ 6–7, Ex. E. In addition, the Supplement Declaration requests a $150.00 liquidated damage 3 fee to be assessed for June 2013, since in the Motion, Plaintiffs "inadvertently left out the $150.00 4 liquidated damage flat fee that should have been assessed for June 2013." Lauziere Supp. Decl. ¶ 5 17. 6 In response to the Court's concerns during the hearing, the Supplemental Declaration 7 explains that even though Plaintiffs request interest on the "unpaid" contributions from June 2013 8 as well as interest on the "paid but late" contributions from June 2013, they did not double-count 9 the interest from June 2013: on April 15, 2014, Defendants made a partial payment of the 10 contributions from June 2013, and the interest shown in the November 25, 2014 Audit Report does 11 not include the interest on the April 2014 late payment. See Lauziere Supp. Decl. ¶ 17. Plaintiffs 12 also clarify that they request a higher interest amount in the Motion than the FAC because they Northern District of California United States District Court 13 updated the interest calculations at the time of filing the Motion. Lauziere Supp. Decl. ¶ 7. In 14 addition, Plaintiffs mention that they changed the status of the November and December 2013 15 contributions from "unpaid" in the FAC to "paid but paid late" in the Motion because Defendants 16 paid those contributions during the pendency of the litigation. Lauziere Supp. Decl. ¶ 4. 17 III. DISCUSSION 18 A. Entry of Default Judgment 19 Plaintiffs apply for a default judgment on the basis that Defendants failed to plead or 20 otherwise defend or appear after valid service. The court may enter a default judgment once the 21 Clerk, under Rule 55(a), has entered a party's default based on a failure to plead or otherwise 22 defend the action. Fed. R. Civ. P. 55(b)(2). If the court is satisfied that jurisdiction is proper and 23 that service of process upon the defendant was adequate, courts are instructed to consider several 24 facts in determining whether to grant default judgment: 25 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) 26 the sum of money at stake in the action, (5) the possibility of a dispute concerning material facts, (6) whether the default was due to 27 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 28 4 0 1 Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1987). Upon default, the court takes all factual 2 allegations in the complaint, except those relating to damages, as true. See TeleVideo Systems, Inc. 3 v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987). 4 Here, the record supports that Defendants are subject to default judgment. Defendants have 5 been adequately served and have not responded, and the Clerk has entered default against 6 Defendants. The undersigned finds that Plaintiffs' claims are well-pleaded. Plaintiffs have offered 7 evidence that Defendants signed a Memorandum Agreement and are thus bound to the Master and 8 Trust Agreements. Lauziere Decl. ¶ 7. These Agreements impose liability on delinquent 9 employers for unpaid contributions, liquidated damages, interest, and attorney's fees. Lauziere 10 Decl. ¶¶ 10–13. Plaintiffs allege that Defendants failed to make complete, timely contribution 11 payments. FAC at 4; Lauziere Decl. ¶¶ 14–16. Consequently, Plaintiffs state a claim under 12 ERISA, 29 U.S.C. § 1145 ("Every employer who is obligated to make contributions to a Northern District of California United States District Court 13 multiemployer plan under the terms of the plan or under the terms of a collectively bargained 14 agreement shall, to the extent not inconsistent with law, make such contributions in accordance 15 with the terms and conditions of such plan or such agreement"). Furthermore, the record contains 16 no evidence of excusable neglect that would justify denying Plaintiffs' request for default 17 judgment. The undersigned thus concludes that liability is established as to Plaintiffs' ERISA 18 claims and that default judgment should be entered against Defendants. 19 B. Remedy 20 1. Section 1132(g) 21 Once liability is established, a plaintiff is required to establish that the requested relief is 22 appropriate. See Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir.1977). Under ERISA, an 23 employee benefit plan that obtains judgment in its favor in an action for unpaid contributions 24 under 29 U.S.C. § 1145 is entitled to the following forms of relief: 25 (A) the unpaid contributions, 26 (B) interest on the unpaid contributions, 27 (C) an amount equal to the greater of— 28 (i) interest on the unpaid contributions, or 5 0 (ii) liquidated damages provided for under the 1 plan in an amount not in excess of 20 percent (or such higher percentage as may be 2 permitted under Federal or State law) of the amount determined by the court under 3 subparagraph (A), 4 (D) reasonable attorney's fees and costs of the action, to be paid by the defendant, and 5 (E) such other legal or equitable relief as the court 6 deems appropriate. 7 29 U.S.C. § 1132(g)(2). Interest on unpaid contributions is determined by the rate provided under 8 the plan, or if none is specified, the rate prescribed under 26 U.S.C. § 6621. Id. 9 2. Contributions 10 Plaintiffs must submit proof of their damages. See TeleVideo, 826 F.2d at 917–18. Here, 11 Plaintiffs seek $9,767.26 in unpaid contributions for the period June through September of 2013. 12 Northern District of California United States District Court Mot. at 4. The Plaintiffs' Audit Report supports the requested amount. Lauziere Decl., Exs. H 13 (Audit Report for Period January 2013 to September 2013) at 8 and F (Master Agreement), §§ 14 28A, E. Thus, it is recommended that the amount be awarded in full. 15 3. Liquidated Damages and Interest 16 In the Motion, Plaintiffs seek liquidated damages and interest in the amount of $4,749.56 17 for delinquent contributions, some of which were paid before the filing of the action and some of 18 which remained unpaid at the time of filing. Mot. at 8. Specifically, Plaintiffs seek $1,800 in 19 liquidated damages and $2,949.56 in interest. See Lauziere Decl. ¶ 15; Exs. H–J; Lauziere Supp. 20 Decl. ¶¶ 9, 17, 21. 21 a. Liquidated Damages 22 The Master Agreement provides for liquidated damages at a flat rate of $150 to be assessed 23 on delinquent contributions. Lauziere Decl., Ex. F, Section 28A. Under 29 U.S.C. § 1132(g)(2), 24 liquidated damages of up to 20 percent are permitted on contributions that remain unpaid at the 25 time the action is filed. See Idaho Plumbers & Pipefitters Health & Welfare Fund v. United Mech. 26 Contractors, Inc., 875 F.2d 212, 215 (9th Cir. 1989). It is unclear whether the statute allows 27 liquidated damages on contributions paid before the action is filed. See Trustees of Bricklayers 28 6 0 1 Local No. 3 Pension Trust v. Huddleston, No. 10-1708 JSC, 2013 WL 2181532, at *5 (N.D. Cal. 2 May 20, 2013) (discussing split of authority). However, even if the statute does not, federal 3 common law allows recovery on contributions paid before filing pursuant to the contract rate (e.g. 4 flat rate of $150). See Bd. of Trustees v. KMA Concrete Construction Co., No. C-10-05774 JCS, 5 2011 WL 7446345, at *4 (N.D. Cal. Dec. 20, 2011) (finding under similar facts a provision 6 providing liquidated damages at a flat rate of $150 enforceable under federal common law where 7 ERISA does not apply); See Idaho Plumbers, 875 F.2d at 217 (ERISA does not preempt the 8 federal common law of liquidated damages when ERISA does not apply). Thus, Plaintiffs may 9 recover liquidated damages even for contributions that were paid before the time of filing. 10 Plaintiffs seek liquidated damages totaling $1,650 for delinquent contributions in the 11 following eleven months: May and June of 2011, August through October of 2011, August 2012, 12 November and December of 2013, and August through October of 2014. Lauziere Decl., Exs. I Northern District of California United States District Court 13 and J (Statements of Interest and Liquidated Damages Due). The requested amount is the sum of 14 eleven months of liquidated damages at the rate specified in the Master Agreement. Thus, the 15 amount should be awarded in full. 16 b. Interest 17 The Master Agreement provides that "all delinquent contributions shall bear simple 18 interest at the rate of one and a half percent (1.5%) per month until receipt of payment." Lauziere 19 Decl., Ex. F, § 28A. As with liquidated damages, 29 U.S. C. § 1132(g) entitles Plaintiffs to interest 20 on contributions unpaid at the time of filing. See Idaho Plumbers, 875 F.2d at 215. Likewise, 21 interest on delinquent contributions paid before filing may be available as a matter of contract. See 22 Board of Trustees of Laborers Health and Welfare Trust Fund for Northern Cal. v. Shade Const. 23 and Engineering, No. C 06-6830 PJH, 2007 WL 3071003, at * 7 (N.D.Cal., Oct. 19, 2007) 24 (finding provision setting interest rate on late contributions at 1.5% per month enforceable). For 25 the reasons stated in Shade Construction, the undersigned concludes that the Master Agreement's 26 interest provision is also enforceable on delinquent contributions paid before the time of filing. 27 Here, Plaintiffs seek $2,949.56 in interest, which comprises the following: (a) $2,253.18 28 for unpaid contributions from June through September of 2013; (b) $682.37 for paid but late 7 0 1 contributions from May and June of 2011, August through October of 2011, August 2012, June 2 2013, November through December of 2013, August 2014; (c) $14.01 for unpaid contributions 3 from September and October of 2014. Lauziere Decl., Exs. H–J (Audit Report and Statements of 4 Interest and Liquidated Damages Due). The submitted materials support awarding the full amount 5 of $2,949.56. See Lauziere Decl., Ex. H (Audit Report); Lauziere Supp. Decl., Exs. B–D, F–K; 6 Lauziere Second Supp. Decl. ¶ 6–7, Ex. E. 7 4. Attorneys' Fees 8 Plaintiffs request $10,857.50 in attorneys' fees: (a) $9,477.50 for 29.503 hours of 9 completed work and (b) $1,380.00 for the anticipated "appearance at the hearing on the motion for 10 default judgment" and "follow-up work regarding the judgment entered by the Court." Carder 11 Decl. ¶ 10. 12 Under ERISA and the Trust Agreements, Plaintiffs are entitled to reasonable attorneys' Northern District of California United States District Court 13 fees. 29 U.S.C. § 1132(g)(2)(D); Lauziere Decl. ¶ 13, Ex. A (Trust Agreements) at 8 (Art IV, § 3). 14 To determine whether Plaintiffs' claimed hours are reasonable, the Court must review attorneys' 15 time records to determine whether the hours are adequately documented. See Hensley v. 16 Eckerhart, 461 U.S. 424, 434 (1983). Decisions by other courts regarding the reasonableness of 17 the rate sought may provide evidence to support a finding of reasonableness. See Widrig v. Apfel, 18 140 F.3d 1207, 1210 (9th Cir. 1998) (holding that rate set by district court, based in part on the 19 rate awarded to same attorney in another case, was reasonable). 20 The completed work consists of the following: (a) $4,916.25 for 14.25 hours of work by 21 Concepción Lozano-Batista, Shareholder (rate of $345 per hour); (b) $4,053.75 for 11.75 hours of 22 work by Ezekiel D. Carder, Shareholder (rate of $345 per hour); (c) $181.25 for 1.25 hours of 23 work by Judy Castillo, Senior Paralegal (rate of $145 per hour); and (d) $326.25 for 2.25 hours of 24 work by Aaron Nathan, Senior Paralegal (rate of $145 per hour). See Carder Decl. ¶¶ 5-9, Ex. A. 25 The Court finds the amounts and rates reasonable given that Plaintiffs' time records are detailed 26 27 3 Carder's Declaration states that the amount is for 28.25 hours of work, but the attached Exhibit A 28 and arithmetic confirm that the amount is for 29.50 hours of work. Carder Decl. ¶ 5, Ex. A (Professional Time Records). 8 0 1 and non-duplicative and that courts in this district have awarded similar hourly rates in similar 2 cases. See Carder Decl., Ex. A; Bd. of Trs. Of the Laborers Health and Welfare Trust Fund v. 3 Perez, No. C-10-2002 JSW JCS, 2011 WL 6151506, at *14 (N.D.Cal. Nov.7, 2011) (finding 4 hourly rates of $345 reasonable in ERISA case); Bd. of Trustees v. C & L Coatings, No. C 12- 5 1368 PJH MEJ, 2012 WL 7748318, at *10 (N.D.Cal. Dec. 18, 2012), report and recommendation 6 adopted, No. C 12–1368 PJH, 2013 WL 1087849, at *1 (N.D. Cal. March 13, 2013) (awarding 7 $145 per hour to paralegal in ERISA case). Therefore, it is recommended that Defendants be 8 ordered to pay Plaintiffs $9,477.50 in attorneys' fees. 9 As for the anticipated fee of $1,380 for "an appearance at the hearing on the motion for 10 default judgment" and "follow-up work regard the judgment entered by the Court," Plaintiffs do 11 not show how the dollar amount was generated. Further, the term "follow-up work" is vague, and 12 Plaintiffs do not justify its necessity. See Bd. of Trustees v. Protech Servs., Inc., No. C 12-01047 Northern District of California United States District Court 13 MEJ, 2014 WL 122702, at *12 (N.D. Cal. Jan. 13, 2014) (denying "expected fees" for "follow-up 14 work" because "Plaintiffs have failed to articulate what 'follow-up work' is necessary once the 15 Court issues its order on Plaintiffs' Motion"). Therefore, the undersigned does not recommend 16 awarding the anticipated fee. 17 5. Costs 18 Plaintiffs request $876.51 in costs, broken down as follows: (a) $400.00 for the filing fee; 19 (b) $455.21 for service on Defendants; (c) $13.80 for "reproduction costs"; and (d) $7.50 for 20 "electronic research (Pacer)." See Carder Decl., Ex. B. (December 17, 2014, Breakdown of Costs). 21 29 U.S.C. § 1132(g)(2)(D) and the Trust Agreements provide for the recovery of 22 reasonable costs of the action. See Lauziere Decl. ¶ 13, Ex. A (Trust Agreements), Art. IV, § 3. An 23 award of costs may include the filing fee, process service fees ("to the extent reasonably required 24 and actually incurred"), and certain reproduction costs. Civil Local Rule 54-3. 25 The record supports that the requested filing fee and process service fees here were 26 "reasonably required and actually incurred" and are thus allowable. Civil Local Rule 54-3. Costs 27 relating to electronic research and reproduction are reasonable. See Lauziere Decl. ¶ 13, Ex. A 28 (Trust Agreements), Art. IV, § 3; see also Ontiveros v. Zamora, No. 2:08-567 WBS DAD, 303 9 0 1 F.R.D. 356, 375 (E.D. Cal. 2014). It is thus recommended that Plaintiffs be awarded the full 2 amount of the requested costs, for a total of $ 876.51. 3 IV. CONCLUSION 4 For the reasons stated above, the following relief is recommended: (1) unpaid 5 contributions in the amount of $9,767.26; (2) liquidated damages in the amount of $1,800.00; (3) 6 interest in the amount of $2,949.56; (4) attorneys' fees in the amount of $9,477.50; (5) costs in the 7 amount of $876.51. The undersigned recommends that Plaintiffs' Motion be GRANTED and 8 judgment entered in the amount of $24,870.83. 9 This case will be reassigned to a United States district judge for further proceedings. Any 10 party may file objections to the recommendations above no later than fourteen days after the party 11 is served with a copy of this report. See 28 U.S.C. § 636(b)(1). 12 Northern District of California United States District Court 13 Dated: March 23, 2015 14 ______________________________________ JOSEPH C. SPERO 15 Chief Magistrate Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 10